The first step has been taken towards merging Tata Steel and Thyssenkrupp, in a move which would create Europe’s second-largest steel group, according to BBC News.
The two companies have been discussing a merger since 2016, when Indian-owned Tata changed plans to sell off its UK sites. A Memorandum of Understanding has been signed which proposes a joint venture on equal terms.
The merger would result in annual savings of up to ?€600m (£533m) and the loss of around 4,000 jobs, with an equal split between administration and production shared across both companies.
Following the merger, the new entity would be headquartered in the Netherlands and would ship around 21 million tonnes of flat steel products each year, second only to ArcelorMittal. The joint venture’s annual turnover would be around ?€15bn with a workforce of 48,000 across 34 locations.
Tata Steel chairman Natarajan Chandrasekaran said: “The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that Thyssenkrupp Tata Steel will have a great future.”
Following the announcement shares in Tata Steel rose 1% while Thyssenkrupp jumped 5%.